Best Short-Term Business Loans 2016

Small Business, Small Business Loans
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Short term business loans can help in an emergency

Short-term business loans can give your business the fast cash it needs to bridge cash flow gaps, handle emergencies and unexpected expenses, or take advantage of a business opportunity. Think of them as quick turnaround loans: Borrow what you can pay back relatively quickly so you can focus on running your business rather than managing debt.

Short-term business financing generally has high borrowing costs, given looser qualifications, faster funding and shorter repayment time frames between three and 36 months. (Read more about the perils of short-term business loans below.) But it can be a good option when you’re in a temporary bind. You can choose between a short-term loan or a short-term line of credit. Lines of credit are more flexible and generally have shorter repayment periods than short-term loans.

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Short-term lines of credit

Short-term business loans

Short-term business loans: Summary of options

There’s one key advantage to repaying a short-term business loan on time: It can help you qualify for a long-term, less expensive business loan in the future. You may want a long-term loan (five to 15 years or longer) for a real estate purchase, business acquisition or debt refinancing. 

Short-term lines of credit: Kabbage, BlueVine and Lending Club

Kabbage’s line of credit allows you borrow only the money you need and pay fees just on that amount. That flexibility makes it a better option for managing smaller expenses such as cash flow than for larger expenses such as an expansion. You repay each draw on the line of credit over six or 12 months.

Borrowers can get fast access to funds, and it’s fairly easy to qualify (look at minimum qualifications below). Kabbage is an especially good option for borrowers with bad credit. Although Kabbage does check your personal credit score, it doesn’t weigh the score as heavily as other factors, such as your average monthly revenue.

The ease of qualifying comes at a cost, because Kabbage’s line of credit carries a higher annual percentage rate than other lines of credit.

kabbage
  • Loan amount: $2,000 to $100,000.
  • APR: 32% to 108%.
  • Loan term: Repaid over 6 or 12 months.
  • Funding time: A few minutes to several days.
  • Read our Kabbage review.
Get started at Kabbage

BlueVine is a good option for businesses with a limited operating history that need to borrow a small amount of cash. The lender requires a minimum of six months in business, with borrowing limits ranging from $5,000 to $100,000. You repay draws on BlueVine’s line of credit weekly over six months. It’s less expensive than Kabbage’s option and has APRs ranging from 16% to 62%. Blue Vine’s funding is as fast as 24 hours, and it takes an average of 12 hours to be approved.

However, borrowers will need strong personal credit (a minimum score of 600), and at least $60,000 annual revenue to qualify.

bluevine-e1431706679103
  • Loan amount: $5,000 to $100,000.
  • APR: 16% to 62%.
  • Loan term: Repaid over 6 months.
  • Funding time: As fast as 24 hours.
  • Read our BlueVine review.
Get started at BlueVine

If you’re looking for the lowest rates, Lending Club is the best option. Its line of credit carries an APR of 8% to 35%. It’s also a good option if you need to borrow a large amount; the lines of credit max out at $300,000. You repay draws monthly over as long as 25 months, but you can pay off the line of credit earlier to save on interest, with no prepayment penalties.

Lending Club, however, is the hardest to qualify for. Like BlueVine, you’ll need a strong credit score (minimum 600), but you’ll also need annual revenue starting at $75,000 and two years of business history to qualify. Funding also takes a bit longer than BlueVine and Kabbage, but typically comes through in less than a week.

LendingClub-box

Line of credit

  • Loan amount: $5,000 to $300,000.
  • APR: 8% to 35%.
  • Loan term: Repaid up to 25 months.
  • Funding time: Less than a week.
  • Read our Lending Club review.
Get started at Lending Club


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Short-term business loans: OnDeck and StreetShares

OnDeck’s term loan is a good option for small-business owners who need fast cash for a small expansion or short-term project, such as a marketing campaign. The lender provides short-term business loans to be repaid daily or weekly over three to 36 months. Funding is fast, typically arriving in a few business days. OnDeck’s APRs range from 9% to 98%, which is more expensive than the other short-term loan option, StreetShares.

To qualify for OnDeck, you’ll need a personal credit score of at least 500, a year of business history and $100,000 in annual revenue. Also, your business must not be on the OnDeck restricted industries list, and you can’t have had any bankruptcies in the past two years.

ondeck
  • Loan amount: $5,000 to $500,000.
  • APR: 9% to 98%.
  • Loan term: Repaid daily or weekly for 3 to 36 months.
  • Funding time: As fast as 24 hours but typically a few days.
  • Read our OnDeck review.
Get started at OnDeck

A lower-cost alternative to OnDeck is StreetShares. It has a lower annual revenue requirement at $25,000 and offers weekly repayments. The funding time is similar to OnDeck. StreetShares also doesn’t charge a prepayment penalty, so you can repay the loan early to save on interest.

On the downside, funding amounts are capped at 20% of your annual revenue. For example, a business with $300,000 in revenue could qualify for up to $60,000 in financing. You’ll also need strong personal credit (600+) and a year or more in business to qualify with StreetShares.

StreetShares-e1459274893272
  • Loan amount: $2,000 to $100,000.
  • APR: 9% to 40%.
  • Loan term: 3 to 36 months.
  • Funding time: 1 to 5 days.
  • Read our StreetShares review.
Get started at StreetShares


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The pitfalls of short-term business loans

There are a few disadvantages to short-term business loans:

Higher cost: They typically carry a higher APR — the total annual cost of borrowing, including all fees and interest — than long-term loans. That’s due to their shorter repayment period, faster funding, looser qualifications and the fact that many are unsecured business loans, which don’t require collateral. Use NerdWallet’s business loan calculator to figure out how much a loan will cost you.

Risk of debt trap: The speed and ease of short-term business loans can become addictive. Instead of repaying the debt in full, business owners may be enticed to refinance and roll over the debt into a new loan. But this can result in a debt trap: continual refinancing just to keep up with payments. This is a common issue with merchant cash advances, a costly form of short-term financing. If you have several high-interest small-business loans, business debt consolidation may be the solution you need.

More frequent repayments: Lenders may require you to make loan payments daily or weekly as opposed to monthly. Although these payments are smaller, their frequency can be an issue for businesses that have uneven sales or those that don’t always hold much cash in a bank account. You’ll have to make sure you have enough money in your account to make the payments at all times, or you’ll risk incurring fees or defaulting on the loan.


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Short-term business loans: Summary of options

Funding optionsGood option for:Loan Amount & APR
Kabbage loans
Get started at Kabbage
• Bad personal credit.
• Fast cash.

• $2,000 to $100,000.
• 32% to 108%.


Before you apply for a Kabbage loan, find out whether you meet the minimum qualifications.

  • No minimum personal credit score required.

  • 1+ year in business.

  • $50,000+ in annual revenue.

  • A business checking or online payment platform required.



Do I qualify?
bluevine
Get started at BlueVine
• Financing smaller investments.
• Newer businesses.
• $5,000 to $100,000.
• 16% to 62%.


Before you apply for a BlueVine line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.

  • 6+ months in business.

  • $60,000+ in annual revenue.

  • Personal guarantee required.



Do I qualify?
lending_club_logo_new-249x47

Line of credit

Get started at Lending Club
• Good personal credit.
• Established businesses.
• $5,000 to $300,000.
• 8% to 35%.


Before you apply for a Lending Club line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.

  • 2+ years in business.

  • $75,000+ in annual revenue.

  • Own at least 20% of the business.

  • No recent bankruptcies or tax liens.

  • Provide collateral for loans and lines of credit of more than $100,000.


Lending Club is currently unavailable to borrowers in Iowa and Idaho.

Do I qualify?
ondeck
Get started at OnDeck
• Bad personal credit.
• Fast cash.
• $5,000 to $500,000.
• 9% to 98%.


Before you apply for an OnDeck loan, find out whether you meet the lender's minimum qualifications.

  • 500+ personal credit score.

  • 1+ year in business.

  • $100,000+ in annual revenue.

  • No bankruptcies in the last two years.

  • Personal guarantee required.




Do I qualify?
StreetShares loans

Get started at StreetShares
• Good personal credit.
• $2,000 to $100,000.
• 9% to 40%.


Before you apply for a StreetShares loan, find out whether you meet the lender's minimum qualifications.

  • 600+ personal credit score.

  • 1+ year in business.

  • $25,000+ in annual revenue.*

  • No bankruptcies in the past three years.

  • No current tax liens or collections (unless you have proper documentation).


You only need 6 months in business if you have $100,000+ in revenue.
StreetShares is currently unavailable to borrowers in North Dakota and South Dakota.

Do I qualify?

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Find and compare the best small-business loans

NerdWallet has created a comparison tool of the best small-business loans to meet your needs and goals. We gauged factors including lender trustworthiness, market scope and user experience, and arranged them by categories that include your revenue and how long you’ve been in business.

Compare business loans
Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

Updated Dec. 9, 2016.